Edward Conard

Top Ten New York Times Bestselling Author

  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “Unintended Consequences is far smarter and more thought-provoking than most economics written for the general public” - Greg Mankiw, Harvard University, Former Chairman of the Council of Economic Advisors
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Tuesday, May 16, 2023

AI Summary. The authors identify a dual U.S. labor market in which a primary segment of about 55% of the population is almost always employed, while a secondary segment of about 14% absorbs most seasonal and business-cycle fluctuations. Workers in the secondary segment have 6x higher turnover and are 10x more likely to be unemployed than primary-segment workers.

Hie Joo Ahn, Bart Hobijn, and Ayşegül Şahin Federal Reserve Board
Date Posted:

New @federalreserve research shows the majority of unemployment in 1980-2021 was concentrated in a Secondary segment of 14% of the population that experiences high labor churn, vs. a Primary segment that is almost always employed.

Does a small segment of workers absorb most labor market fluctuations?

Core argument: Workers in the U.S. primary labor sector, about 55% of the population, are almost always employed and rarely experience unemployment.

Workers in the primary sector, who make up around 55% of the population, are almost always employed and rarely experience unemployment. The secondary sector, which constitutes 14% of the population, absorbs most of the short-run fluctuations, both at seasonal and business cycle frequencies. Workers in this segment experience six times higher turnover rates than those in the primary tier and are ten times more likely to be unemployed than their primary counterparts. The tertiary segment consists of workers who infrequently participate in the labor market but nevertheless experience unemployment when they try to enter the labor force.

Takeaways by Macro Roundup® AI

  1. Workers in the U.S. primary labor sector, about 55% of the population, are almost always employed and rarely experience unemployment.
  2. The secondary sector, 14% of the population, absorbs most short-run labor market fluctuations at both seasonal and business cycle frequencies, with turnover rates six times higher and unemployment ten times more likely than in the primary tier.
  3. The tertiary segment comprises workers who participate in the labor market infrequently yet experience unemployment when attempting to enter the labor force.

AI Summary. U.S. labor force data show immigrants accounted for 49% of labor force growth over roughly the past three decades and their children another 21%, together about 70% of an increase of nearly 32.8m workers. Immigrants rose from about 10% to 18% of the labor force, and immigrants plus their children from 18% to 29%.

David Bier Cato Institute
Date Posted:
Is Database:
Database

The American labor force grew by 32.8M workers between 1995-2022, and 70% of that growth consisted of immigrants or children of immigrants. Immigrants and their children are 29% of the total American workforce.

How much of labor force growth came from immigrant families?

Core argument: Immigrant workers accounted for 16.1 million (49%) and children of immigrants 6.7 million (21%) of the nearly 32.8 million increase in the U.S. labor force from 1995 to 2022, per Current Population Survey data.

From 1995 to 2022, the U.S. labor force increased from nearly 131.6 million workers to over 164.3 million—an increase of nearly 32.8 million workers: 16.1 million of that increase came from immigrant workers (49%) and 6.7 million were children of immigrants (21%), according to data from the Current Population Survey’s Annual Social and Economic Supplement. Just 9.9 million were U.S.-born citizens without a foreign‐born parent. The actual effect of cutting off all immigration would have been even greater since the working immigrant population would have declined without more immigration by about 4.5 million. Immigrants have increased from about 10% of the U.S. labor force in 1995 to 18% in 2022, and immigrants and their children have gone from 18% to 29%.

Takeaways by Macro Roundup® AI

  1. Immigrant workers accounted for 16.1 million (49%) and children of immigrants 6.7 million (21%) of the nearly 32.8 million increase in the U.S. labor force from 1995 to 2022, per Current Population Survey data.
  2. Just 9.9 million of the U.S. labor force increase from 1995 to 2022 came from U.S.-born citizens without a foreign-born parent, as the total labor force rose from nearly 131.6 million to over 164.3 million.
  3. Immigrants rose from about 10% of the U.S. labor force in 1995 to 18% in 2022, and immigrants plus their children from 18% to 29%; without further immigration, the working immigrant population would have declined by about 4.5 million.

AI Summary. The authors propose capping US federal spending at a long-term average of inflation-adjusted federal revenue, requiring Congress to cut spending or raise taxes if large deficits persist and allowing override only by supermajority. Such a longer-term fiscal framework would separate concerns about debt from the debt ceiling, permitting clean increases in the limit while the framework holds.

Glenn Hubbard Financial Times
Date Posted:

Glenn Hubbard argues that Congress should legislate “a spending limit for the US linked to a long-term average of federal revenue.”

Glenn Hubbard argues that Congress should legislate “a spending limit for the US linked to a long-term average of...

Can a spending cap tied to average revenue resolve debt ceiling standoffs?

Core argument: Tim Kane and the author proposed a US spending limit tied to a long-term inflation-adjusted average of federal revenue, triggering Congressional action to cut spending or raise taxes if large deficits persist, overridable only by a supermajority.

A decade ago, Tim Kane and I proposed a spending limit for the US linked to a long-term average of federal revenue (adjusted for inflation), triggering Congressional action to reduce spending or to raise taxes if large deficits persist. Congress could only override it with a supermajority. The precise mechanism is less important than Sweden’s intuition that a longer-term fiscal framework and direct accountability are needed. Such a mechanism separates worries about debt from the issue of the debt ceiling. Adhering to the budget framework allows future clean increases in the debt ceiling as long as the framework is in place. This would be an advance over our present stand-off and adding near-term spending restraint offers a win for McCarthy.

Takeaways by Macro Roundup® AI

  1. Tim Kane and the author proposed a US spending limit tied to a long-term inflation-adjusted average of federal revenue, triggering Congressional action to cut spending or raise taxes if large deficits persist, overridable only by a supermajority.
  2. Drawing on Sweden's intuition, the authors argue that a longer-term fiscal framework and direct accountability matter more than the precise mechanism chosen.
  3. Such a budget framework would separate concerns about debt from the debt ceiling itself, allowing future clean debt-ceiling increases while the framework holds, with near-term spending restraint offered as a win for McCarthy.

AI Summary. Europe is more economically exposed to China than the US: about 8% of listed European firms' revenues come from China versus 4% for American firms, and multinational investment in China equals 2% of Europe's GDP versus 1% for America. Total China exposure for Europe's big six reached 5.6% of combined GDP, up from 3.9%.

Economist Staff The Economist
Date Posted:
Is Database:
Database

According to an @TheEconomist analysis, Europe has significantly more economic exposure to China than the US. 8% of public European firms’ revenues are from China relative to 4% for American firms.

Is Europe more economically exposed to China than America?

Core argument: Europe's big six economies have total China exposure of 5.6% of their combined GDP, up from 3.9% in 2011 and above America's 4.2%, on a yardstick measuring exposure as a share of each country's own economy.

Europe is more economically exposed to China than America is. Some 8% of publicly-listed European firms’ revenues are from China, compared with 4% for American ones, according to Morgan Stanley. Europe and America send a similar share of goods exports to China (7-9%), but because Europe is a more trade-intensive economy its sensitivity is higher. Multinational investments in China are worth 2% of Europe’s GDP compared with 1% for America. We have come up with a yardstick of “total China exposure,. We measure each country’s exposure as a share of its own economy.  The European big six’s total China exposure has hit 5.6% of their combined GDP, up from 3.9% in 2011. That is higher than America’s at 4.2%. There is a big range: Italy and Spain are at just 1-2%, France and Britain are at 4-5%. Germany is a huge outlier at 9.9%.

Takeaways by Macro Roundup® AI

  1. Europe's big six economies have total China exposure of 5.6% of their combined GDP, up from 3.9% in 2011 and above America's 4.2%, on a yardstick measuring exposure as a share of each country's own economy.
  2. Germany is an outlier with total China exposure of 9.9% of GDP, while France and Britain sit at 4-5% and Italy and Spain at 1-2%.
  3. Some 8% of publicly listed European firms' revenues come from China versus 4% for American firms, according to Morgan Stanley, and multinational investments in China are worth 2% of Europe's GDP against 1% for America.

AI Summary. A survey of nearly 500 small-business owners found 45% expect to expand their workforces over the next 12 months, down from 58% two months earlier and 59% a year earlier. The share has stayed below 50% for two consecutive months, its lowest level since the early months of the Covid-19 pandemic.

Ruth Simon Wall Street Journal
Date Posted:

A new @WSJ survey found that 45% of small business owners are seeking to expand their workforce in the next year, down from 59% in May of 2022.

Are fewer small businesses planning to expand their workforces?

Core argument: 45% of small-business owners said in May they expect to expand their workforces over the next 12 months, the lowest share since June 2020, according to a Vistage Worldwide survey of nearly 500 owners conducted for The Wall Street Journal.

The portion of small-business owners who expect to expand their workforce over the next year was below 50% for the second month in a row in May, hitting the lowest level since June 2020, during the early months of the Covid-19 pandemic, according to a recent survey conducted for The Wall Street Journal. Forty-five percent of entrepreneurs said in May they expect to expand their workforces in the next 12 months, according to the survey of nearly 500 small-business owners by Vistage Worldwide, a business-coaching and peer-advisory firm. That’s down from 47% in April, 58% in March, and 59% in May 2022.

Takeaways by Macro Roundup® AI

  1. 45% of small-business owners said in May they expect to expand their workforces over the next 12 months, the lowest share since June 2020, according to a Vistage Worldwide survey of nearly 500 owners conducted for The Wall Street Journal.
  2. The share of small-business owners expecting to expand their workforces fell from 59% in May 2022 and 58% in March to 47% in April and 45% in May, according to the Vistage Worldwide survey.
  3. Small-business owners' expectations for workforce expansion stayed below 50% for a second consecutive month in May, according to the survey conducted for The Wall Street Journal.

AI Summary. A man carrying a rare mutation had brain scans showing amyloid plaques and tau protein at levels resembling severe dementia, yet one small region coordinating memory and navigation, the entorhinal cortex, had low tau levels. The authors argue this challenges the theory that Alzheimer's is primarily driven by amyloid plaques.

Sara Reardon Nature
Date Posted:

Researchers have found a mutation that protected a man with early stage Alzheimers from dementia until he was 67. @Nature

Researchers have found a mutation that protected a man with early stage Alzheimers from dementia until he was 67. @Nature

Is Alzheimer's primarily driven by amyloid plaques?

Core argument: Brain scans of a man carrying a rare Alzheimer's mutation showed high levels of amyloid plaques and tau, resembling the brain of a person with severe dementia, says study co-author Joseph Arboleda, an ophthalmologist at Harvard Medical School.

When the researchers scanned his brain, they found high levels of the sticky protein complexes known as amyloid plaques, which are thought to kill neurons and cause dementia, as well as a protein called tau that accumulates as the disease progresses. The brain looked like that of a person with severe dementia, says study co-author Joseph Arboleda, an ophthalmologist at Harvard Medical School in Boston. But one small brain area called the entorhinal cortex, which coordinates skills such as memory and navigation, had low levels of tau.  The study challenges the theory that Alzheimer’s disease is primarily driven by amyloid plaques, which are the targets of several drugs recently approved by the US Food and Drug Administration. The drugs effectively remove amyloid from the brain, but lead to only a moderate improvement in rates of cognitive decline.

Takeaways by Macro Roundup® AI

  1. Brain scans of a man carrying a rare Alzheimer's mutation showed high levels of amyloid plaques and tau, resembling the brain of a person with severe dementia, says study co-author Joseph Arboleda, an ophthalmologist at Harvard Medical School.
  2. The man's entorhinal cortex, a small brain area that coordinates skills such as memory and navigation, had low levels of tau.
  3. The study challenges the theory that Alzheimer's is primarily driven by amyloid plaques, the target of several drugs recently approved by the US Food and Drug Administration that remove amyloid but lead to only moderate improvement in rates of cognitive decline.

Wednesday, May 17, 2023

AI Summary. The US fiscal deficit averaged just under 3% of gross national product from 1950 to 2011 but 6.6% from 2012 to 2022, driven mainly by health and social security spending, a pattern that holds excluding pandemic years. Even assuming permanently elevated profit margins, US equity valuations imply low long-run returns.

James Montier GMO
Date Posted:

James Montier @GMOInsights notes that American firms’ profit margins have been supported by persistent fiscal deficits and argues that the current historically-high PE multiple “dooms investors to low returns in the long run.”

Do elevated profit margins from larger deficits justify US equity valuations?

Core argument: The U.S. fiscal deficit averaged 6.6% of GNP over 2012–2022, more than double the just-under-3% average of 1950–2011, a pattern the author finds holds even when Covid years are excluded.

Between 1950 and 2011, the fiscal deficit averaged just less than 3% of GNP each year. In the period from 2012 to 2022, the fiscal deficit was more than double the previous average, at 6.6%. This isn’t just the impact of the pandemic: the same basic pattern holds even when I exclude the Covid years! The main sources of the increased deficit have been health spending and social security expenditure (again true even with Covid data excluded). Is this era of what Minsky would have called “Big Government” here to stay? Even if I take a very bullish view, that this is indeed a new era of permanent deficits and thus profit margins will remain elevated relative to history, I still cannot find any valuation attraction in U.S. equities in aggregate. The Shiller P/E naturally embodies the decade of higher-than-normal profit margins and yet still stands at 30x. Even without any valuation or margin mean reversion, this dooms investors to low returns in the long run.

Takeaways by Macro Roundup® AI

  1. The U.S. fiscal deficit averaged 6.6% of GNP over 2012–2022, more than double the just-under-3% average of 1950–2011, a pattern the author finds holds even when Covid years are excluded.
  2. The author identifies health spending and social security expenditure as the main sources of the increased deficit, also true with Covid data excluded.
  3. The author finds no valuation attraction in aggregate U.S. equities even assuming permanently elevated profit margins, since the Shiller P/E already embodies a decade of above-normal margins and still stands at 30x, dooming investors to low long-run returns.

AI Summary. S&P Global Ratings projects that without reforms to ageing-related fiscal policies the typical government's deficit would reach 9.1% of GDP by 2060, up from 2.4%, with pension costs rising 4.5 percentage points of GDP to 9.5%. A one percentage point rise in borrowing costs would add roughly 40–60 percentage points to debt-to-GDP ratios in Japan, Italy, the UK and US.

Mary McDougall Financial Times
Date Posted:

Rating agencies are reporting that demographics are impacting governments credit ratings globally. S&P has forecast that, in the absence of policy reforms, half of the world’s largest economies will be downgraded to junk by 2060, up from 1/3 today. @FT

Are ageing populations already weighing on government credit ratings?

Core argument: S&P Global Ratings estimates that, absent reforms to ageing-related fiscal policies, the typical government would run a deficit of 9.1% of GDP by 2060, up from 2.4% in 2025.

Marko Mrsnik, lead sovereign analyst at S&P Global Ratings, added that, according to an S&P stress test, a single percentage point increase in borrowing costs would increase debt to gross domestic product ratios for Japan, Italy, the UK and the US by around 40-60 percentage points by 2060. It estimated that, in the absence of reforms to ageing-related fiscal policies, the typical government would run a deficit of 9.1% of GDP by 2060, a huge increase from 2.4% in 2025. S&P also forecast that pension costs would rise by an average of 4.5 percentage points of GDP by 2060, reaching 9.5%, albeit with a large variation among countries. The rating agency projected that, between 2022 and 2060, healthcare spending would rise by 2.7 percentage points of GDP for the median country.

Takeaways by Macro Roundup® AI

  1. S&P Global Ratings estimates that, absent reforms to ageing-related fiscal policies, the typical government would run a deficit of 9.1% of GDP by 2060, up from 2.4% in 2025.
  2. An S&P stress test indicates that a one percentage point increase in borrowing costs would raise debt-to-GDP ratios for Japan, Italy, the UK and the US by around 40-60 percentage points by 2060.
  3. S&P forecasts pension costs rising by an average of 4.5 percentage points of GDP to 9.5% by 2060, with large variation across countries, and healthcare spending up 2.7 percentage points of GDP for the median country between 2022 and 2060.

AI Summary. Non-financial firms in the S&P 500 and Europe's STOXX 600 spent more on capital investment and shareholder payouts than their operations generated, funding the gap with debt. At current debt levels, each percentage-point rise in interest rates is estimated to wipe out roughly 4% of these firms' combined earnings, pressuring dividends and buybacks.

Economist Staff The Economist
Date Posted:

.@TheEconomist estimates that, at current debt levels, every percentage point increase in interest rates will wipe out 4% of combined S+P earnings, putting pressure on capital expenditure and buy-backs.

How much do rising interest rates cut debt-funded companies' earnings?

Core argument: At current debt levels, each one-percentage-point rise in interest rates would wipe out roughly 4% of the combined earnings of non-financial firms in the S&P 500 and Europe's STOXX 600, by The Economist's estimates.

In the years before the pandemic the non-financial firms in the S&P 500 and STOXX 600 index in Europe consistently splashed more cash on capital investments and shareholder payouts than they generated from their operations, with the gap plugged by debt. But if they wish to avoid a sustained drag on profitability from higher interest rates, they will soon need to start paying down those debts. At current debt levels, every percentage point increase in interest rates will wipe out roughly 4% of the combined earnings of these firms, according to our estimates. Many firms will have no choice but to cut back on dividends and share buy-backs, squeezing investor returns. Borrowing money in order to fork it over to shareholders makes less sense in a world of higher interest rates, argues Lotfi Karoui of Goldman Sachs.

Takeaways by Macro Roundup® AI

  1. At current debt levels, each one-percentage-point rise in interest rates would wipe out roughly 4% of the combined earnings of non-financial firms in the S&P 500 and Europe's STOXX 600, by The Economist's estimates.
  2. In the years before the pandemic, non-financial firms in the S&P 500 and STOXX 600 consistently spent more on capital investment and shareholder payouts than their operations generated, funding the gap with debt.
  3. Many of these firms will have no choice but to cut dividends and share buy-backs, squeezing investor returns, and Lotfi Karoui of Goldman Sachs argues that borrowing to hand cash to shareholders makes less sense at higher interest rates.

AI Summary. Prices at sit-down restaurants — which reflect domestic wages, rents, groceries, equipment costs, and consumers' willingness and ability to splurge — are rising far more slowly than during the 2021–2022 inflation spike, but annualized increases remain 2–3 percentage points faster than before the pandemic. Rather than continuing to accelerate, this measure appears to be settling into a 4–5% range.

Matt Klein The Overshoot
Date Posted:

Using his favored inflation barometer, restaurant prices, @M_C_Klein argues inflation has settled at a new baseline of 4-5%; he notes this was the pace coming out of the Volcker inflation victory.

Are restaurant prices signaling inflation is settling above its pre-pandemic pace?

Core argument: Prices for sit-down restaurant meals are rising 2–3 percentage points faster on an annualized basis than before the pandemic, though far more slowly than during the 2021–2022 inflation spike.

Perhaps the clearest way to synthesize this is to look at changes in the price of eating at sit-down restaurants. This incorporates domestic wages, rents, groceries, equipment, and consumers’ willingness (and ability) to splurge. The good news is that price of dining out—which had been a harbinger of the durability of the 2021-2022 inflation spike, which I confess I did not fully appreciate at the time—is rising far more slowly now than then. The bad news is that annualized price increases are still 2-3 percentage points faster than before the pandemic. It is not obvious to me that this is a serious problem for policymakers. Inflation is not continuing to accelerate, but instead seems to be settling into the 4-5% range.

Takeaways by Macro Roundup® AI

  1. Prices for sit-down restaurant meals are rising 2–3 percentage points faster on an annualized basis than before the pandemic, though far more slowly than during the 2021–2022 inflation spike.
  2. Sit-down restaurant prices incorporate domestic wages, rents, groceries, equipment, and consumers' willingness and ability to splurge, and served as a harbinger of the durability of the 2021–2022 inflation spike.
  3. Inflation is not continuing to accelerate but appears to be settling into a 4–5% range, which is not obviously a serious problem for policymakers.

AI Summary. China dominates electric-vehicle battery supply chains, controlling 41% of global cobalt mining and the most lithium mining, and is projected to produce more than twice as many batteries as all other countries combined by 2030. It can build battery factories at nearly half the cost of North America or Europe.

Agnes Chang and Keith Bradsher New York Times
Date Posted:

Benchmark Minerals forecasts that by 2030 China will build twice as many batteries as the rest of the world combined, leveraging advantages in raw materials, components, and domestic EV demand. @NYT

Can the world build electric car batteries without China?

Core argument: China will make more than twice as many batteries as every other country combined in 2030, according to estimates from Benchmark Minerals, despite billions in Western investment.

Despite billions in Western investment, China is so far ahead — mining rare minerals, training engineers and building huge factories — that the rest of the world may take decades to catch up. Even by 2030, China will make more than twice as many batteries as every other country combined, according to estimates from Benchmark Minerals, a consulting group. China controls 41 percent of the world’s cobalt mining, and the most mining for lithium, which carries a battery’s electric charge. China became the largest battery producer partly by figuring out how to make battery components efficiently and at lower cost. China can build battery factories at nearly half the cost of countries in North America or Europe, according to Heiner Heimes, a professor at RWTH Aachen University in Germany. China has the most electric cars on the road and nearly all of them use Chinese-made batteries. Companies anywhere in the world will look to form partnerships with Chinese manufacturers to enter or expand in the industry.

Takeaways by Macro Roundup® AI

  1. China will make more than twice as many batteries as every other country combined in 2030, according to estimates from Benchmark Minerals, despite billions in Western investment.
  2. China controls 41 percent of the world's cobalt mining and the most lithium mining, and became the largest battery producer partly by figuring out how to make battery components efficiently and at lower cost.
  3. China can build battery factories at nearly half the cost of countries in North America or Europe, according to Heiner Heimes of RWTH Aachen University, and companies worldwide will look to partner with Chinese manufacturers to enter or expand in the industry.

AI Summary. An analysis of federal death statistics found the mortality rate for Americans ages 1 to 19 rose 10.7% in one year and a further 8.3% the next, with ages 10 to 19 accounting for most of the increase. Boys, whose death rates are roughly 2x those of girls, worsened slightly more.

Janet Adamy Wall Street Journal
Date Posted:

The mortality rate for young Americans (aged 1-19) is at the highest level in 15 years, with boys’ mortality 2x of girls.

Are death rates among American children and teenagers rising?

Core argument: The mortality rate for Americans ages 1–19 rose 10.7% between 2019 and 2020 and a further 8.3% the following year, according to an analysis of federal death statistics led by Steven Woolf of Virginia Commonwealth University.

Between 2019 and 2020, the overall mortality rate for ages 1 to 19 rose by 10.7%, and increased by an additional 8.3% the following year, according to an analysis of federal death statistics led by Steven Woolf, director emeritus of the Center on Society and Health at Virginia Commonwealth University. Older children and teenagers, ages 10 to 19, accounted for most of the increase in death rates for young people. Boys, whose mortality rates are roughly twice those of girls, saw their death rates worsen to a slightly greater degree during the pandemic, Woolf found. The overall findings held true when researchers excluded those ages 18 and 19, who were included in the broader research because such government data is grouped in five-year age bands.

Takeaways by Macro Roundup® AI

  1. The mortality rate for Americans ages 1–19 rose 10.7% between 2019 and 2020 and a further 8.3% the following year, according to an analysis of federal death statistics led by Steven Woolf of Virginia Commonwealth University.
  2. Children and teenagers ages 10–19 accounted for most of the increase in death rates among young Americans, Woolf's analysis of federal death statistics found.
  3. Boys, whose mortality rates run roughly twice those of girls, saw their death rates worsen to a slightly greater degree during the pandemic, and the overall findings held when researchers excluded 18- and 19-year-olds.

AI Summary. The share of women in their late 20s working in the four highest-paying broad occupation groups rose from about 30% to 55%, while the share in professional occupations rose from about 19% to 26%. Women early in their careers shifted away from predominantly administrative work toward better-paying occupations.

Oksana Leukhina and Amy Smaldone Federal Reserve Bank of St. Louis
Date Posted:

The gender pay gap has narrowed as women have become more attached to the labor force and moved into higher earning occupations. Between 1970 and 2015 the share of women in the four highest paying occupations increased from 30% to 55%. @stlouisfed

Has a shift into higher-paying occupations narrowed the gender pay gap?

Core argument: The share of women in their late 20s working in the top four highest-paying occupations rose from about 30% in 1970 to about 55% in 2015, with occupations ranked by average male wages in 2015.

The figure shows how the distribution of working women across 10 broadly defined occupations evolved over time. We are looking at women in the beginning of their careers (in their late 20s). The occupations (top to bottom) are ranked according to the average male wages in 2015, with technicians, managers and professionals having the highest average wages that year, and machine operators and those in farming and services ranking near the bottom of the pay distribution. In 1970, women entered into lower-paying occupations, working predominantly in administrative jobs. Over time, women clearly shifted toward better-paying occupations. For example, we see that the percentage of women working in the professional occupations went up from about 19% in 1970 to about 26% in 2015. The fraction of women working in the top four high-paying occupations increased from around 30% to 55%.

Takeaways by Macro Roundup® AI

  1. The share of women in their late 20s working in the top four highest-paying occupations rose from about 30% in 1970 to about 55% in 2015, with occupations ranked by average male wages in 2015.
  2. The share of women in their late 20s working in professional occupations rose from about 19% in 1970 to about 26% in 2015.
  3. Women beginning their careers in 1970 worked predominantly in lower-paying administrative jobs and shifted over time toward better-paying occupations, with technicians, managers and professionals having the highest average male wages in 2015.